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President Obama's State of the Union Address – Energy Issues at the Fore

In his State of the Union address this week President Obama made the case for producing more of the United States' energy supplies domestically and pursuing an "all-of-the-above" approach to further bolster the economy and national security.

Speaking to a joint session of Congress in his third State of the Union address, Obama called for policies that harness a mixture of fossil-fuel and alternative energy resources. He said his administration would open most of the nation's offshore oil-and-gas resources for development, continue supporting shale-gas production and put more renewable-energy projects on federal lands.

But he also made requests of Congress. He repeated his unsuccessful call last year for a mandate on clean power sources and asked Congress to pass tax incentives for cleaner energy sources while rolling back subsidies for fossil fuels.

The president has faced immense pressure from Republicans, energy industry groups and others to make it easier to drill for oil and gas offshore as well as mine for coal. Meanwhile environmental and clean-energy advocates, who form a component of his base, have pressured the President to reduce U.S. reliance on fossil fuels and shift toward zero-emission sources like solar and wind.

More oil and gas

In his address, Obama defended his administration's record on fossil fuels, saying U.S. oil production reached its highest level in eight years and net oil imports, at 46 percent in 2011, had dipped to their lowest level in 16 years.

The President said he would direct his administration to open 75 percent of the nation's potential offshore fossil-fuel resources. Saying that tapping the nation's oil reserves "isn't enough," he added he would "take every possible action to safely develop" domestic natural gas.

But he said his administration would move forward on new rules requiring disclosure of chemicals used in the hydraulic fracturing process on public lands. "America will develop this resource without putting the health and safety of our citizens at risk," Obama said. The President has directed his administration to develop a plan for safe extraction of natural gas from shale deposits, which the White House says will support more than 600,000 jobs. The administration is moving forward with what it calls "common-sense" rules to ensure that safe drilling practices are followed and the types of chemicals used in the so-called fracking method are disclosed for operations on public lands. At the same time the President boasted of the nation's vast shale gas deposits, the EPA is poised to release a widely anticipated study on hydraulic fracturing. Many in the gas industry fear that the upcoming EPA study will call for harsh new regulations on the process, and many environmental groups - a key constituency for Mr. Obama during this year's re-election bid - are publicly pushing the administration to outlaw fracking entirely.

Boosting alternative energy

With Republicans holding a strong majority in the House, Obama acknowledged he probably can't win approval of certain policies he campaigned on in 2008, such as sweeping climate-change legislation. But he said the nation nonetheless should help support the development of alternative energy sources.

"I will not cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here," Obama said. Obama plans to direct his administration to establish solar energy zones and wind energy areas on public lands to power 3 million homes by the end of 2012.

In addition to seeking a "clean-energy standard," he called on Congress to pass clean-energy tax credits and other incentives to get businesses to make their facilities more energy-efficient. He didn't specify which energy credits he was referring to; some are set to expire in the coming two years. The White House estimates incentives and efforts to reduce regulatory barriers could save $100 billion from the nation's energy bills and cut energy imports. Obama also said he will direct the Defense Department to make the largest renewable energy purchase in history — 1 gigawatt, or 1 billion watts.

Facing pressure from Republicans over what some have called "job-killing" regulations, Obama said his administration has rolled back unneeded or outdated rules to help business. But he defended other regulations his administration has handed down, including the power-plant regulation (known as the Mercury and Air Toxics Standards) and tougher safety standards for offshore drilling.

"I will not back down from making sure an oil company can contain the kind of oil spill we saw in the Gulf two years ago," Obama said. "I will not back down from protecting our kids from mercury pollution, or making sure that our food is safe and our water is clean."

Missing from Obama's speech was any mention of the Keystone XL pipeline, which the State Department denied a permit for over concerns about a Feb. 21 decision deadline that was imposed by Congress in 2011. Republicans have vowed to push legislation to approve the pipeline. The project would carry Canadian oil sands crude from Alberta to the Gulf Coast. The fight over the pipeline will continue next week in a House Energy and Commerce Committee hearing on the administration's decision.

The following is a short synopsis of other issues the President talked about in his State of the Union address.

Financial Fraud

Obama proposed steps to target fraud in the financial sector and mortgage industry, with a Financial Crimes Unit to crack down on bankers and financial service professionals, and a separate special unit of federal prosecutors and state attorneys general to expand investigations into abusive lending that led to the housing crisis. "This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans," Obama said.

Taxes

Said the wealthy should pay their fair share in taxes, arguing that anyone who makes more than $1 million should pay a minimum tax rate of at least 30 percent. He also provided more details about the so-called Buffett rule, which sets a goal of a minimum tax rate for those earning $1 million or more a year.

Housing

Proposed a nationwide program to allow homeowners with privately held mortgages to refinance at lower interest rates. It would cover both loans issued by government-controlled mortgage giants Fannie Mae and Freddie Mac and private bank mortgage lenders. Congress would have to approve, a difficult hurdle. Under the plan, any homeowner current on his or her mortgage could take advantage of lending rates now at 4 percent or below. Administration officials offered few details but estimated savings of about $3,000 a year for average borrowers.

Immigration & Workforce

Reiterated a call for comprehensive immigration reform, including giving responsible young people a chance to earn their citizenship. He suggested creating a Veterans Job Corps to help communities hire veterans, and he committed to closing the wage gap between men and women.

Trade Enforcement

Called for the creation of a new trade enforcement unit that would go after unfair trade practices around the world, including China. Obama said the U.S. would provide financing to put its companies on even footing when the Chinese or other competitors use unfair export financing to help their businesses. He also called for better inspections to stop counterfeit, pirated or unsafe goods from entering the U.S.

War Savings & Infrastructure Investment

Proposed using half the savings achieved by winding down the wars in Iraq and Afghanistan to cover costs of new investments in infrastructure. Obama wants the money to go toward fixing existing roads and building new high-speed rail projects. He also plans to sign an executive order in the coming weeks to clear some of the bureaucratic roadblocks that have slowed work on projects that have already been funded. The White House says the other half of the savings from drawing down the wars would go toward reducing the national debt.

Outsourcing

Proposed eliminating tax incentives that make it more attractive for companies to ship jobs overseas. The proposal would require American companies to pay a minimum tax on their overseas profits in order to prevent other countries from attracting U.S. businesses with unusually low tax rates. Obama also wants to eliminate tax deductions companies receive for the cost of shutting down factories and moving production overseas. Instead, Obama wants to create a new tax credit to cover moving expenses for companies that close production overseas and bring jobs back to the U.S. He also wants to reduce tax rates for manufacturers and double the tax deduction for high-tech manufacturers in order to create more manufacturing jobs in the U.S.